Harvard Law: Anthropic is about to sell a safety mission Wall Street can veto

Of the three companies that have ever installed investor-overriding mission guardians in a for-profit structure, one ended in spectacular failure, one already melted down once, and the third filed confidentially an IPO on Monday.

A new Harvard Law paper, AI Corporate Governance and Ben & Jerry’s Risk, by professor Jesse Fried and S.J.D. candidate Idan Reiter, lands not just as Anthropic enters the public markets but at a moment when OpenAI’s governance is under more scrutiny than ever. A federal jury ruled against Elon Musk’s lawsuit on May 18; former board members testified about being misled by CEO Sam Altman; and the company faces multiple wrongful death lawsuits alleging ChatGPT contributed to self-harm and violence. Meanwhile, OpenAI completed its conversion to a public benefit corporation last October, a restructuring Fried argues doesn’t solve the underlying problem.

The Ben & Jerry’s precedent

The paper’s authors call it the “Ben & Jerry’s risk,” or the danger that mission guardians will not only harm investors, but also achieve the exact opposite of what they set out to do. When Unilever acquired Ben & Jerry’s in 2000, it agreed to install self-perpetuating independent directors who could override Unilever to protect the brand’s social mission. 

For two decades, tensions stayed behind closed doors. Then in 2021, the independent board announced it would not renew the license of Ben & Jerry’s Israeli licensee, over Unilever’s objections. Counterboycotts, state divestments, activist investor interventions, lawsuits, and the resignation of Unilever’s CEO all came next, just as the company lost billions in market value.

Fried and Reiter argue that the guardians’ actions backfired entirely. Unilever overrode the directors in 2022 and gave the Israeli licensee rights to sell Ben & Jerry’s in Israel and its controlled territories in perpetuity, which is exactly what the directors had tried to prevent. Unilever then spun off its ice cream businesses altogether, ensuring the guardians could never impose costs on the parent company again.

The parent company fired Ben & Jerry’s CEO after a battle of political issues, with Unilever at the time having “informed the Independent Board” of the change. This caused the brand’s namesake Jerry Greenfield to quit during the public dispute, and the July 2021 boycotts that ensued saw Unilever’s market cap dropping by $20 to $26 billion in the months that........

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